41 U.S.C. § 1502: Cost accounting standards

The Cost Accounting Standards Board has exclusive authority to prescribe, amend, and rescind cost accounting standards, and interpretations of the standards, designed to achieve uniformity and consistency in the cost accounting standards governing measurement, assignment, and allocation of costs to contracts with the Federal Government. The Administrator, after consultation with the Board, shall prescribe rules and procedures governing actions of the Board under this chapter. The rules and procedures shall require that any action to prescribe, amend, or rescind a standard or interpretation be approved by majority vote of the Board. In this paragraph, the term “subcontract” includes a transfer of commercial products or commercial services between divisions, subsidiaries, or affiliates of a contractor or subcontractor. Cost accounting standards prescribed under this chapter are mandatory for use by all executive agencies and by contractors and subcontractors in estimating, accumulating, and reporting costs in connection with the pricing and administration of, and settlement of disputes concerning, all negotiated prime contract and subcontract procurements with the Federal Government in excess 1 $35,000,000, as adjusted in accordance with applicable requirements of law, including requirements relating to inflation in 1 So in original. Probably should be followed by “of”. section 1908 of this title . a contract or subcontract (or the portion of a contract or subcontract) for the acquisition of a commercial product or commercial service; a contract or subcontract (or the portion of a contract or subcontract) where the price negotiated is based on a price set by law or regulation; or a firm, fixed-price contract or subcontract (or the portion of such contract or subcontract) awarded on the basis of adequate price competition without submission of certified cost or pricing data. exempt classes of contractors and subcontractors from the requirements of this chapter; and establish procedures for the waiver of the requirements of this chapter for individual contracts and subcontracts. is primarily engaged in the sale of commercial products or commercial services; and would not otherwise be subject to the cost accounting standards under this section. The head of an executive agency may waive the applicability of the cost accounting standards for a contract or subcontract under exceptional circumstances when necessary to meet the needs of the agency. A determination to waive the applicability of the standards under this subparagraph shall be set forth in writing and shall include a statement of the circumstances justifying the waiver. The head of an executive agency may not delegate the authority under subparagraph (A) or (B) to an official in the executive agency below the senior policymaking level in the executive agency. criteria for selecting an official to be delegated authority to grant waivers under subparagraph (A) or (B); and the specific circumstances under which the waiver may be granted. The head of each executive agency shall report the waivers granted under subparagraphs (A) and (B) for that agency to the Board on an annual basis. the probable costs of implementation, including any inflationary effects, compared to the probable benefits; the advantages, disadvantages, and improvements anticipated in the pricing and administration of, and settlement of disputes concerning, contracts; and the scope of, and alternatives available to, the action proposed to be taken; prepare and publish a report in the Federal Register on the issues reviewed under paragraph (1); and publish a notice of proposed rulemaking in the Federal Register and provide all parties affected at least 60 days after publication to submit their views and comments. Rules, regulations, cost accounting standards, and modifications thereof prescribed or amended under this chapter shall have the full force and effect of law, and shall become effective within 120 days after publication in the Federal Register in final form, unless the Board determines that a longer period is necessary. The Board shall determine implementation dates for contractors and subcontractors. The dates may not be later than the beginning of the second fiscal year of the contractor or subcontractor after the standard becomes effective. Rules, regulations, cost accounting standards, and modifications thereof prescribed or amended under this chapter shall be accompanied by prefatory comments and by illustrations, if necessary. disclose in writing their cost accounting practices, including methods of distinguishing direct costs from indirect costs and the basis used for allocating indirect costs; and agree to a contract price adjustment, with interest, for any increased costs paid to the contractor or subcontractor by the Federal Government because of a change in the contractor’s or subcontractor’s cost accounting practices or a failure by the contractor or subcontractor to comply with applicable cost accounting standards. Functions exercised under this chapter are not subject to sections 551, 553 to 559, and 701 to 706 of title 5. The Administrator for Federal Procurement Policy shall revise the rules and procedures prescribed pursuant to section 26(f) of the Office of Federal Procurement Policy Act ([former] 41 U.S.C. 422(f) ) [now 41 U.S.C. 1502(a) , (b)] to the extent necessary to increase the thresholds established in section 9903.201–2 of title 48 of the Code of Federal Regulations from $25,000,000 to $50,000,000. any aspect of the regulation; or the manner in which section 26 of the Office of Federal Procurement Policy Act [now 41 U.S.C. 1501 et seq.] is administered through the regulation; or a requirement to apply the regulation. The Administrator for Federal Procurement Policy shall ensure that this section [see Tables for classification] and the amendments made by this section are implemented in a manner that ensures that the Federal Government can recover costs, as appropriate, in a case in which noncompliance with cost accounting standards, or a change in the cost accounting system of a contractor segment or subcontractor segment that is not determined to be desirable by the Federal Government, results in a shift of costs from contracts that are not covered by the cost accounting standards to contracts that are covered by the cost accounting standards. Final regulations required by subsection (c) shall be issued not later than 180 days after the date of the enactment of this Act [ Oct. 5, 1999 ]. Subsection (c) shall cease to be effective one year after the date on which final regulations issued in accordance with that subsection take effect. The cost accounting standards issued pursuant to section 26(f) of the Office of Federal Procurement Policy Act ([former] 41 U.S.C. 422(f) ) [now 41 U.S.C. 1502(a) , (b)], as amended by this section, shall not apply during fiscal year 2000 with respect to a contract entered into under the authority provided in chapter 89 of title 5, United States Code (relating to health benefits for Federal employees). any educational institution or federally funded research and development center that is associated with an educational institution in accordance with Office of Management and Budget Circular A–21, as in effect on January 1, 1999 ; or any contract with a nonprofit entity that provides research and development and related products or services to the Department of Defense. contracts that are entered into on or after such effective date; and determinations made on or after such effective date regarding whether a segment of a contractor or subcontractor is subject to the cost accounting standards under section 26(f) of the Office of Federal Procurement Policy Act ([former] 41 U.S.C. 422(f) ) [now 41 U.S.C. 1502(a) , (b)], regardless of whether the contracts on which such determinations are made were entered into before, on, or after such date.” Not later than 180 days after the date of the enactment of this Act [ Dec. 18, 2025 ], the Administrator for Federal Procurement Policy shall revise the rules and procedures prescribed pursuant to subsections (a) and (b) of section 1502 of title 41 , United States Code, to the extent necessary to increase the thresholds established in section 9903.201-2 of title 48, Code of Federal Regulation, from $50,000,000 to $100,000,000 (as adjusted for inflation in accordance with section 1908 of title 41 , United States Code). received a single contract award under such cost accounting standards with a value equal to or greater than $100,000,000 (as adjusted for inflation in accordance with section 1908 of title 41 , United States Code); or received contracts during the cost accounting period that ended preceding the date of the report with a net value equal to or greater than $100,000,000 (as adjusted for inflation in accordance with section 1908 of title 41 , United States Code).”